Deutsche Postbank AG remains on growth track. It increased its pre-tax profit before taxes by 20.8% to €429 million (the comparative figures for the first half-year of 2005 are pro-forma data including BHW and Branches). The cost-income ratio improved from 75.6% to 70.6%. In the classical banking business, i.e. without Transaction Banking, the ratio was bettered from 74.2% to as low as 69.0%. Return on equity before taxes increased from 14.7% to 16.9%.
Despite the charges from integrating BHW and Branches, Postbank successfully expanded its business. As a result of its sustained cost culture, it reduced its administrative expenses, even though the efficiency and qualification drive at BHW and Branches ties up resources.
Total income increased by 6.0% to over €2.0 billion, pushing over the €2 billion barrier in a half-year period for the first time. In the process, the balance-sheet related revenues, i.e. the total of net interest income, net trading income and net income from investment securities – improved strongly, by 8.4% to €1.3 billion. On the back of good development in customer business, net interest income increased 6.8% to €1.1 billion. Net income from investment securities rose 18.5% to €128 million, while net trading income rose 13.1% to €121 million.
Net fee and commission income improved by 1.7% to €703 million in the first six months of 2006.
The allowance for losses on loans and advances increased slightly by 8.4% to €155 million, in line with credit volume growth.
Postbank was very satisfied with the development of administrative expenses. Despite charges from the integration and steadily growing customer business, it managed to reduce its costs by 0.9% to €1.4 billion. In doing so, initial cost synergies from the integration with BHW were achieved. With steadily increasing income, a high level of cost consciousness is increasingly becoming the second engine of profits growth in the Postbank Group.
Net other operating income and expenses at €-4 million were €40 million lower than the previous year figure. However, other expenses include integration costs of €34 million.
Total assets increased by €2.8 billion to €183.1 billion compared with December 31, 2005.
Pleasing customer growth and new business
Even though in the second quarter of 2006 Postbank continued to push the integration of its new units energetically, including the new qualification drive, it managed to make further progress in gaining new customers. In the second quarter of 2006, the Postbank Group gained 222,000 new customers, making a total of 467,200 new customers in the first half-year. In a market comparison, this is an outstanding result. The number of new private checking accounts in the first six months was 218,800 after 239,000 in the previous year. Savings volume, including deposits on mortgage savings accounts, increased to €59.5 billion after €59.2 billion as at June 30. 2005. A total of €1.3 billion was invested in the new product Quartalssparen, 55% of this being new money. €6.0 billion was invested in our DAX Sparbuch and €4.1 billion in the SparCard Direkt.
Excellent growth with life assurance
As a result of the higher subsidies for the Riester Pension this year, there has been an excellent development in the life assurance business. In the first half-year of 2006, new contracts totaling €1.6 billion were concluded, an increase of 76% against the previous year. Postbank expects to maintain this increased level, and even to improve on it. The new Branches and Mobile Sales should provide the necessary impetus.
Growing credit business reduces deposits overhang
Overall new business with mortgage lending improved by 8.6% to €6.3 billion. Here the DSL and Postbank brands contributed €3.8 billion and the BHW brand €2.5 billion. Furthermore, Postbank acquired mortgage portfolios of €2.0 billion with BHW customers. For consumer lending new business improved by 25.5% to €610 million. The installment credits portfolio rose correspondingly by 10.5% to €2.1 billion.
Postbank makes no changes to its objectives for 2008. By this time, it wants to achieve a return on equity before taxes figure of more than 20% and a cost-income ratio under 63%.
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